The dollar rebounds on upbeat services report

By IBT Staff Reporter On 02/03/10 AT 11:35 AM

The U.S. dollar recouped its earlier losses after the release of ISM non-manufacturing report which showed that the services expanded in January to 50.5 from 49.8 in December. The dollar index, a gauge of the dollar movements against a basket of major currencies, reached a high of 79.36 after touching a low of 78.67. The dollar bounced on hopes the economy is recovering from the worst recession since the Great Depression.

With regard to the euro-dollar pair, it inclined on the daily and 4-hour charts, paring its earlier gains generated today when the pair reached a high of 1.4026. Today, euro zone services beat forecasts, yet it was lower than December's reading. In addition, concerns with regard the Greek deficit pushed down the 16-natin currency after the European Commission mentioned today it will endorse Greece plan. It seems that the euro will continue its bearish pattern that started at the beginning of December after taking breath for two days. Meanwhile, the pair is traded at 1.3922 after reaching a low of 1.3901, where the coming support is seen at 1.3870 and next resistance is at 1.3975.

As for the sterling-dollar pair, it is also declining on the daily and 4-hour charts, reversing from the day's high at 1.6068. The pound gained earlier today after a report showing that confidence inclined in the U.K. The pair may extend its downside trend that started since mid November. Now, the sterling is traded at 1.5925, recording a low of 1.5915, while it is moving between support at 1.5850 and resistance at 1.6010.

Relative to the dollar-yen pair, it edged up on the daily and 4-hour charts, spurred by the U.S. news. The pair is currently traded at 91.05, after breaching strong resistance at 90.34 which represents 38.2% Fibonacci retracement to the upside trend that started at the beginning of December. Today, the pair reached a high of 91.10 and a low of 90.06, while it is expected to face the coming support level at 90.20, while the resistance is spotted at 91.65.